Australian treasurer Peter Costello has given the go-ahead for Singapore Telecommunications's (SingTel) $17 billion bid to take over local carrier Cable & Wireless Optus. The approval process has taken five months, following SingTel's winning bid for CWO in March.
The treasurer, taking advice from his department's Foreign Investment Review Board (FIRB), said Australian government approval was subject to certain conditions.
- that SingTel and Optus keep to an agreement signed with Australia's Department of Defense, which allows for Australia to assume control of Optus communication satellites if a hostile military situation develops.
- that SingTel and Optus get formal approval from the U.S. State Department to change the ownership of U.S. technology contained in those satellites from an Australian company to a Singapore company.
In a written response, Lee Hsien Yang, president and chief executive officer of SingTel said the conditions imposed are reasonable and not unexpected, and that SingTel is hopeful of getting U.S. clearance for the deal .
In the Australian government statement, Costello said that Australian consumers will benefit from strong competition now that the country's second-largest operator has extra backing to match former monopoly carrier Telstra.
Not everyone in Australia views the deal in such positive terms. Media magnate Kerry Stokes has mounted a public campaign to prevent the takeover, saying the deal would put crucial Australian communication infrastructure in the hands of a foreign government and potentially undermine Australia's national security.
Costello said the conditions imposed on the deal are designed to protect Australia's security interests and met with the approval of the Department of Defense and the Australian Security Intelligence Organisation (ASIO).
Australian media reported on Thursday morning that Stokes would continue to look for ways to stop the deal going ahead.
SingTel - assuming U.S. approval is forthcoming - has until May next year to acquire the outstanding shares in Optus that it does not already hold.